Townsend Corporation Declared a 1-For-1 Stock Split to All Common

question 81

Essay

Townsend Corporation declared a 1-for-1 stock split to all common stock shareholders of record on December 31, 20X3. Townsend reported current E&P of $400,000 and accumulated E&P of $1,000,000. The total fair market value of the stock distributed was $500,000. Regina Williams owned 1,000 shares of Townsend common stock, with a tax basis of $200 per share ($200,000 total). The fair market value of the common stock was $300 per share on December 31, 20X3. What is Regina's income tax basis per share in the new and existing common stock she owns in Townsend, assuming the distribution is tax-free?

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Definitions:

Vitamin C

A water-soluble vitamin found in various fruits and vegetables, essential for the repair of tissue and enzymatic production of certain neurotransmitters.

Scurvy

A disease resulting from a deficiency of vitamin C, characterized by swollen bleeding gums, bruising, joint pain, and general weakness.

Magnesium

A mineral and a key component of many enzymes, playing a critical role in various physiological processes including muscle and nerve function, blood sugar control, and blood pressure regulation.

Carbon Dioxide Metabolism

The process by which living organisms produce energy through the oxidation of carbon dioxide, or its involvement in photosynthesis in plants.